How to Recognize a Free Lunch Seminar Investment Scam

More than 6 million Americans age 55 and older have attended a free lunch investment seminar. But most of these so-called seminars are actually sales presentations, where the attendees are often pressured into making unsuitable -- or even fraudulent -- investments. If a friend, neighbor, or relative accepts an invitation to one, make sure they know the score before they go.

Instructions

  • Step 1: Educate them Explain that many free-lunch seminar presenters claim that "nothing will be sold" at the actual presentation. But odds are anyone who goes will get a sales pitch at a later date -- sometimes using high-pressure tactics.
  • TIP: Download "How to Spot a Free Lunch Scam," which lists the 5 most common persuasion tactics, at "createthegood.org":http://createthegood.org/.
  • Step 2: Ask the right questions If the presenter tries to sell anything, tell your friend to ask these 3 questions: Are you licensed to sell this product? Who are you registered with? And, is this investment registered with the U.S. Securities and Exchange Commission?
  • TIP: Most investments must be registered with the SEC. All investment professionals must be registered with the Financial Industry Regulatory Authority known as FINRA, the SEC, or their state securities regulator.
  • Step 3: Check the answers Stress the importance of checking the seller's answers, and offer to help do it. Look for proof of registration of the seller and the product. "SaveAndInvest.org":http://www.saveandinvest.org/ can walk you both through the vetting process. Or call (888) 295-7422.
  • Step 4: Report suspicious information Urge them to report any irregularities to the proper authorities -- FINRA, the SEC, or their state securities or insurance regulator. "SaveAndInvest.org":http://www.saveandinvest.org/ can help you determine where to report your suspicions.
  • Step 5: It’s OK to walk away If the professional is not registered and the product is not registered, tell your friend to walk away.
  • Step 6: Become a monitor Become a Free Lunch Monitor -- someone who audits free-lunch financial seminars and workshops and reports any suspicious activities. You or your friend can download the Free Lunch Monitor tool kit at "createthegood.org":http://createthegood.org/, and use the checklist found in the how-to guide to rate investment presentations and submit your ratings to AARP.
  • FACT: In a national survey by FINRA, 3 times as many known victims of investment fraud went to a free investment seminar as the general population.

You Will Need

  • Healthy skepticism
  • "How to Spot a Free Lunch Scam"

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